Knight losses estimated at $270 mln after taxes-CEO letter

August 09, 2012|Reuters

Aug 9 (Reuters) - Trading losses at Knight Capital Group Inc were about $270 million after taxes from the Aug. 1software glitch that sent the firm scrambling for a financiallifeline, Chief Executive Tom Joyce told clients in a letter.

The brokerage has suffered from a decline in customerconfidence following last week's debacle, which resulted in thetrading losses and a $400 million weekend deal for a consortiumof financial firms to take a more than 70 percent stake in thefirm for a heavily discounted $1.50 a share.

"We are grateful for the support of the industry, andsincerely appreciate our clients' loyalty in standing by usduring this period," Joyce said in the letter, dated Tuesday. Acopy of the letter was obtained by Reuters.

Joyce said in the letter that the firm is reviewing whatwent wrong that morning with outside advisers, and conductingits own internal review. He wrote that the trading software thatcaused the 45 minutes of chaos and steep losses has been removedfrom the company's systems.

"We have taken measures to enhance our processes designed toprevent another similar situation from arising," he wrote.

Knight, based in Jersey City, New Jersey, remains in goodstanding with the Depository Trust & Clearing Corp and theOptions Clearing Corp, Joyce wrote, while its broker-dealersubsidiaries, Knight Capital Americas LLC and Knight CapitalEurope Limited, have maintained capital levels above the minimumrequired and consistent with historical levels.